Despite
only
a modest rise in November durable goods orders, the trend has improved
sharply. Durable goods orders rose 0.2% last month after an unrevised
0.6% October decline. The latest increase lifted orders 5.4% above the
March low and the y/y decline of 7.8% compares with a peak 26.6%
decline last winter. A 0.5% November gain had been the Consensus
expectation.

A 5.5% (-10.9% y/y) decline in transportation equipment
orders in fact masked the degree of improvement in overall orders.
Transportation orders were pulled down by a 32.6% (-3.7% y/y) decline
in civilian aircraft. Excluding transportation altogether, orders rose
2.0% during November and have risen 7.3% from their April low.

Primary
metals orders also continued their recovery with a 1.4% November
increase (-7.3% y/y) and they have risen one-quarter from the March
low. Electrical equipment orders rose about as they did during October.
The 3.2% gain lifted orders 10.0% from the spring low. Orders for
computers & related equipment also improved for the second
month by 1.6% during November. The increase lifted them 14.9% above
April's low. Finally, machinery orders increased 3.5% (-14.0% y/y),
made up half of the October decline and raised them 9.8% from the low.

The decline in aircraft bookings also masked improvement in other
capital goods orders. Nondefense capital goods orders less aircraft
more than recovered the October slump with a 2.9% increase and they now
are 9.8% above the April low.

Shipments of durable goods ticked up
0.3% (-8.8% y/y) during November following increases in two of the
prior three months. Shipments now have risen 4.4% from the April low.
The improvement has been paced by strong monthly gains in shipments of
metals (-16.6% y/y), up 24.2% from the low. Machinery orders rose 2.0%
(-20.3% y/y) after touching the cycle low in October. Electrical
equipment orders rose 2.2% (-9.1% y/y), about as they did in October.

As was
suggested by the October data, the shedding of inventories of
durable manufactured goods seems to be ending after nearly a year of
correction. Durable goods inventories slipped 0.2% (-11.3% y/y) after
no change during October. Declines in inventories lowered the ratio to
shipments to its lowest since October of last year.. Unfilled orders
fell another 0.7% (-10.9% y/y) led by declines in the transportation
sector. Less transportation backlogs rose 0.1% (-11.4% y/y) for the
second gain in three months.